While the rise in interest rates came as no surprise to traders and investors, the resulting drop in precious metal prices has been significant. Because gold prices hit a minor surge in the 24 hours previous to the FOMC announcement, the subsequent drop in spot price appeared even more dramatic.
Hawkish policy makers voted unanimously to raise interest rates from the previous 0.25-0.50% to 0.50-0.75%- the first rate hike in over a year.
While December’s interest rate increase came as expected, the market was not prepared for the FOMC announcement claiming 2-3 more interest rate hikes will occur in 2017.
Gold has already dropped below $1,128 this morning, down nearly $17 since the market opened. Silver, platinum, and palladium have followed suit each down $0.78, $18.70, and $5.05, respectively.
Forecasts anticipate a volatile market in the days to come as traders attempt to decide how to proceed in this uncertain market.
